The Benefits of Private Money Loans
Hard money loans are considered to be financing which is being provided by non-institutional lenders. You could actually find a lot of hard money lenders that are offering fast funding and comes with attractive interest rates.
The borrower should implement a thorough check on the lender’s reputation as well as the business and when you implement your research, you will be able to find that hard money lenders will be able to give you a great advantage on your quest in funding real estate investment projects.
A benefit about hard money lenders is the fact that investors could in fact secure pre-approvals in just a maximum of two days when they have submitted the documents being requested by the lender. A hard money lender focuses whether the assets have good market value and the borrower equity would be about 20%. The financing could take place for just less a week compared to normal loans that could take about a month or more. If you are going to inquire about hard money lenders, one of the questions that you should ask is about how fast they can fund you.
Through the private lenders, you can then acquire more freedom when it comes to creating a customized repayment plan. But this freedom is not present with big financial institutions. But you will instead need to accept the payment terms being set by the bank. However, with private lenders, you could talk with them and then end up with an agreeable repayment plan that you find suitable for you.
Few Requirements Needed
When you plan on applying for a loan from normal financial institutions, you will be expected to give the necessary requirements like your income history and experience and others more. It’s no secret that a bank approval can be stressful. With the hard money lenders, you will not be burdened about the various requirements. This is as long as you have high-value assets and also have at least about 20% equity stake, there’s a good chance that you could qualify for the loan.
Prepayment Penalties are None
If you will get the loan from the established bank, you actually are subjected to prepayment penalties when you will pay off the loan before the maturation date. Most of the fix and flip lenders will not charge prepayment penalties, so if you ever have extra cash and decides to pay off the loan before its due date, you will be confident doing it without worrying about being penalized for it.
Credit History is Not an Issue
Through a private lender, there’s actually less emphasis that’s placed on your weak credit history. This would be because a private lender is going to be based with loan approval on the property value, borrower equity, etc. If you are able to meet this criteria, there’s a chance that you are going to get funded.